Govt to shine a light on misuse of New Zealand companies and directorships

Measures to increase transparency and combat misuse of New Zealand companies have been progressed today with the release of a discussion paper for consultation.

Minister of Commerce and Consumer Affairs Hon Kris Faafoi says the paper, approved by Cabinet yesterday, seeks to get New Zealanders’ feedback on measures to stop misuse of companies to disguise criminal activity. He is also seeking input on measures aimed at ensuring people appointed as company directors are appropriate.

“New Zealand is not a major centre for financial crime but it is not immune. Police estimate $1.35 billion in proceeds of fraud and illegal drugs is laundered through corporate entities in New Zealand.

“We know too that there are still people in New Zealand acting as directors when they have been banned from doing so in other jurisdictions.

“This isn’t acceptable and we need to strengthen our corporate governance to stop this erosion of New Zealand as a good place for honest business. The discussion paper we have now released looks at measures both at a company and director level – I have seen evidence that we need to act on both.”

Beneficial owners is an area of focus, Mr Faafoi says. “We need know who owns or effectively controls corporate entities. This is crucial to detecting and countering criminal activity.Ownership information is also important for other businesses, and can help assess the risk of doing business with it.

Mr Faafoi says the discussion document is also seeking feedback on other issues. “This includes improving regulation of directors which I understand could be enacted relatively quickly.”

You can find more information on these discussion documents and how to provide feedback here. Submissions close on Friday 3 August.

Who are beneficial owners?

Beneficial owners are persons who own or effectively control a corporate entity, such as a company.

They may own or control the entity indirectly, such as through intermediaries, and may be different to the legal owners.

For example, a person may be a beneficial owner of a company if they control at least 25 per cent of the voting rights or if they have the power to appoint directors.